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Ukraine launches a new agency in the Ministry of Defense to make procurement more efficient

Arsen Zhumadilov, the first director of a new agency for rear supply in the Ukraine’s Ministry of Defense
Ukraine launches a new agency in the Ministry of Defense to make procurement more efficient

Unlike other Ukrainian ministries, which since 2017 have been operating according to the new Prozorro system, the Ministry of Defense was a partial exception due to secrecy. Prozorro system made all state procurement procedures conducted online on the basis of open price competition. In the Ministry of Defense, part of the contacts could be concluded bypassing Prozorro, which posed a threat of corruption.

The new Agency for rear supply not only aims to limit the scope of secret contacts but also to ensure equal participation of all suppliers in the competition and the complex strategically-planned approach to covering the army’s needs.

Arsen Zhumadilov, the first director of a new agency, was appointed on 28 August 2023 by the decree of Ukraine’s Minister of Defense, Oleksiy Reznikov. He explained how the new agency will work, saying that his team has been working for the last four months, preparing to launch it:

The stage of preparation for our public procurement reform is coming to an end. It was four months of development of the legal and regulatory framework, design of business processes of the supply system, and interaction with internal customers and external stakeholders,” he said.

He also acknowledged that the main work is still ahead — “to transform the Agency from a few lines of writing in the state register, which it is now, into the key operator of the rear supply of the army, the largest public customer of the country, on whose work millions of servicemen rely, for cooperation with which thousands of suppliers compete.”

The next stage, he said, is the adoption of the governmental decree making the Agency responsible for the budget program on procurement for the military. After that, it can start working. 

The main strategic challenge is rethinking the function of rear supply for the needs of the Armed Forces from “purchased – handed over” to “closed the needs of our military,” Zhumadilov also said. This would require a more strategic and well-planned approach to what is needed in the army and how all needs should be met.

 Before the current appointment, Zhumadilov worked extensively on reforming Ukraine’s procurement sector in the Ministry of Healthcare and then in the framework of the Change Support Office at the Ministry of Defense of Ukraine.

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